RE: BitConnect Ponzi Eats up 7% of Mined Bitcoin Daily! Part 7
hey cryptick. here's a few observations for your model. i believe bitconnect is a brillant way for them to move btc from your pocket to theirs.
every transaction on bitconnect costs 0.0004 bitcoin. who knows how many take place a day. the more bitcoin appreciates the more it costs to transact. Currently at 10K, thats 4$ a trade. I'd guess at least 2.5K sell and 2.5K buy orders daily. So 2 btc per day up to 10 or more. They trade 365/d/y so thats between 7.5MM to 30 MM annually in fees ( that's not considering the anticipation of btc prices rising). These fees may just be enough to pay server bills. who knows.
the price of bitcoin is up 1000% this year. i believe bitconnect is an arbitrage play in the sense that they are betting that by you exchanging your bitcoin for fiat earnings (investors are not paid in bcc but dollars of course) that they can pay you 1% on your fiat and pocket the 2% you don't realize you are lending out. the only problem bitconnect will have is if 1) there is a large collapse in bitcoin (highly unlikely) but investigate tether which many claim is also a method of pumping bitcoin and 2) if people start to realize it's better to hold btc (but greed triumphs over rationality) 3) large accounts that try to break their model by using compounding at such a high number to destabilize the platform 4) inability to recruit new members
Example-lets say i invest 5 bitcoins 6 months ago. Well the price of those btc was equal to 10K us fiat. now those bitcoins are worth 50K us fiat. At a return of .01% paid daily for 120 days we see that they would return 12K fiat so 24K returned in fiat to btc is.....2.5 btc. Bitconnect keeps 2.5 bitcoin and keeps the 0.0004 btc trading fees. So unless you are pricing this model in btc you can't account for the true winners here....bitconnect
I agree with most of points #2 and #3. On point one I have looked partially into is bitcoin transactions. They batch the transactions, (one transaction has 10 to 40 transactions in it) this cuts down transaction costs, on the other hand they actually wash or churn the money multiple (say 5 to 10) times (needless) (well not really needlessly, -it is a way to hide the truth about what they are doing) (and it works because i gave up, no one cares and I am not getting enough payout on these posts to put in the time to prove the fraud they are doing) . So all that bitcoin churning is happening, but the fees are a minor cost of doing business in a ponzi scheme.
Yeah Bitconnect is getting so big it could take over bitcoin. I think it will pop soon; but we will see.